Gevo to Retrofit Ethanol Plant for Isobutanol Production

Gevo plan to produce Isobutanol using an ethanol plant they purchased in Luverne from Agri-Energy in 2010; they will retrofit the plant for producing the chemical. Could ventures like this help ethanol manufacturers?

Isobutanol is more energy dense than ethanol; as a fuel, this makes it useful. It also behaves more like gasoline physically which means it fits more easily into existing vehicle fuelling infrastructure. It also is of value to chemical markets, as it is used to produce a range of common chemicals and plastics. Gevo’s Executive Vice President for Corporate Development, Jack Huttner, claims that biobased isobutanol can be produced more cheaply than petroleum based isobutanol.

By 2012, Gevo plan to be producing isobutanol on a commercial scale at a plant formerly dedicated to bioethanol fuel production by fermentation of corn and believe the venture will be profitable by 2014. The retrofit involves using a strain of E.coli geared to isobutanol (rather than ethanol) production and the installation of a separator for constantly removing isobutanol from the fermenter.  While they say isobutanol can be produced cheaply at the moment, they anticipate that as cellulosic ethanol technology develops, the cost of producing isobutanol can be decreased along with ethanol. Gevo and ethanol manufacturer Poet actually have claimed that ethanol and isobutanol production go hand in hand; to the point that supply chains for the two could be joined without being in competition. Huttner and Jeff Laut, Poet President, both expressed interest in cooperation between the ethanol and isobutanol industries.

Gevo have also decided that they will not buy corn; they will make agreements with consumers of isobutanol for the consumers to buy the corn and will pay Gevo to refine it for them. This measure is intended to protect against price fluctuations in their consumer markets. Huttner said "Most of the big chemical companies are used to dealing with commodity hedging and pricing and are willing to deal with that themselves. It makes good business sense to share commodity risk with your customers." How this arrangement works for Gevo will be worth watching; this removes the feedstock cost for Gevo and ensures that they will always have buyers for their product, but how many consumer companies will be willing to enter into such an arrangement with the increased risk? Also, would this arrangement have an impact on the eligibility of Gevo for subsidies for biofuel production? 

Could isobutanol production be a way for ethanol producers to add value to their operations? The plant in Laverne formerly produced 20 million gallons of ethanol a year and by the middle of next year Gevo expects to be producing 18 million gallons of isobutanol. Accounting for the difference in energy density between ethanol and isobutanol this actually could mean an overall increase in the mileage the plant’s output produces, if all of the output were to be used in fuel. However, isobutanol is primarily used by the chemical industry at present, which is generally more stable than the biofuel industry, operating with higher profit margins. This could provide ethanol manufacturers with a safety net, something to keep revenue coming in if there are fluctuations in ethanol markets. As the supply chains between the two are so close, ethanol and isobutanol could be produced in parallel with less difficulty; perhaps by using a “double” culture of E.coli (one strain for ethanol and one for isobutanol) and some separation equipment.